When An Attorney's Misconduct Becomes A Business Risk

A recent Illinois ARDC recommendation for disbarment highlights the severe risks attorney misconduct poses to business clients. Discover how breach of fiduciary duty and professional negligence can impact your company's bottom line and why vetting your legal counsel is essential for avoiding business litigation risk.

Professional misconduct by lawyers doesn't just affect the lawyer — it can ripple outward and create serious legal, financial, and reputational risk for the businesses they represent. The recent disciplinary decision in In re John Joseph Pappas serves as a stark example of how alleged ethical breaches by counsel can have profound consequences for clients and for the legal profession as a whole.

The Facts: Misuse of Client Funds and Unprofessional Conduct

According to the Illinois Attorney Registration and Disciplinary Commission (ARDC) Hearing Board's findings, attorney Pappas allegedly misappropriated $294,550.87 from a client. That company had sold a valuable horse for $950,000, and the proceeds were placed into a client trust account under the control of Pappas' law firm. Rather than preserving the funds for his client — as required by professional trust accounting rules — Pappas was accused of using the money for unauthorized purposes and failing to return it upon request.

In addition to the fiduciary breach, the Hearing Board found that Pappas engaged in unprofessional and intimidating conduct toward opposing counsel in a separate matter, including reciting opposing counsel's home address during a court proceeding and using abusive language in a deposition. These behaviors were found to violate basic professional conduct obligations, including Illinois Rule of Professional Conduct 4.4(a), which prohibits lawyers from using means that have "no substantial purpose other than to embarrass, delay, or burden" another party.

Taken together, the Hearing Board recommended disbarment, the most serious sanction available, citing the gravity of the misconduct, the documented harm to others, and Pappas' prior discipline in 2016 for related trust account issues.

Why Business Clients Should Pay Attention

At first glance, disciplinary actions against lawyers might seem like an internal matter for the legal profession. But for business owners and corporate decision-makers, this case underscores several important lessons:

1. Trust Accounts Are Not Optional: When lawyers hold client funds — whether for settlement proceeds, escrow in a transaction, or funds awaiting distribution — they must segregate those monies and handle them with the utmost integrity.
2. Professional Conduct Has Business Impacts: Unprofessional conduct — such as intimidation, abusive language, or exposing private information about opposing counsel — can have real consequences like harming your legal strategy and credibility in litigation, increase costs by provoking sanctions or unnecessary disputes, or damage relationships with courts and other counsel, which matters in jurisdictions where reputational currency influences scheduling, negotiation leverage, or case outcomes. Business clients should consider a lawyer's conduct history — not just their resume — especially for high-stakes litigation where ethical lapses by counsel can exacerbate risk.
3. Disciplinary History Is Public Information and Can Matter to Due Diligence: In this case, the Hearing Board noted that Pappas had a prior discipline in 2016 involving client funds. That prior history factored heavily into the recommendation for disbarment. This illustrates a broader point: some disciplinary history is part of the professional record of an attorney, and businesses should include it as part of their vetting process when hiring outside counsel. The Illinois ARDC maintains searchable disciplinary records, and many state bars publish public discipline orders. Conducting a pre-engagement check can help avoid onboarding an attorney whose practice history includes serious ethical issues.
4. Discipline Protects the Profession and the Public: One of the chief justifications for lawyer discipline is to preserve the integrity of the legal profession and protect the public. When lawyers fail to adhere to basic ethical standards, it undermines trust not only in those individuals but in the system at large. For businesses that interact with courts, regulators, and counterparties daily, having confidence in the integrity of your own counsel — and of the broader profession — is essential to doing business effectively. In Pappas, the board's recommendation of disbarment reflects that seriousness: a pattern of misconduct, harm caused, and prior discipline weigh heavily in assessing whether a lawyer can be trusted to continue practicing.

Ethics Are Not Abstract — They're Business Critical

The disciplinary decision in In re John Joseph Pappas is more than a lawyer's internal personnel matter. It holds practical lessons for business clients about the importance of ethics, trust accounting, and professional conduct. By understanding how disciplinary issues arise and affect legal representation, business leaders can better protect their interests, reputations, and bottom line.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.